Traditional wealth management firms can tap into a "gateway" of younger clients — but only if they offer technology tools similar to those of upstart do-it-yourself (DIY) firms, a new study said.
The two rankings below show how several dozen firms rated among clients who have hired financial advisors and those who are DIY investors. The results come from research and consulting firm JD Power's annual U.S. Investor Satisfaction Study, unveiled March 18.
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More important than which companies topped the rankings, though, was the presence of fintech firms in the upper echelons, reflecting their growing reach in retail wealth management services, according to Mike Foy, the managing director of JD Power's wealth management practice. Newer names with a fintech focus in the wealth management retail marketplace like SoFi, Ally, WeBull, Robinhood, E-Trade from Morgan Stanley, Acorns and Stash appeared prominently on the list beside brands that have been fixtures for many more decades. But only some of them rated ahead of the more established names for investor satisfaction.
"Two of the top three ranked brands for do-it-yourself investor satisfaction in this year's study are fintechs, which is noteworthy because they are increasingly being viewed not only as innovators but also as trusted brands — and attracting affluent investors along the way," Foy said in a statement. "Another major trend we see this year is steadily increasing interest among younger, affluent DIY investors in seeking professional advice. Brands that can attract these clients when they are new to investing and offer them flexible options for both digital and human advice as their needs become more complex will be the big winners going forward."
To that point, the share of DIY investors with $250,000 or more in investable assets who described themselves as "definitely likely" to hire an advisor within the next year rose to 19% from only 10% in the previous annual survey. Among those with that level of investable assets who have children, the share expanded to 24% from 15% in the prior year.
In fact, the so-called robo advisor services that provide guidance alongside investing services appear to be acting as a "gateway, not replacement, for human advice," JD Power's news release said. At least 17% of DIY robo advice clients said they're "definitely likely" to hire an advisor in the next 12 months, compared to only 4% of DIY clients who don't receive any robo advice. For DIY investors with at least $250,000 in assets, the share who are getting robo advice and expecting to work with a human advisor in the next year was 28%.
Scroll down the slideshow for JD Power's investor satisfaction rankings, with the DIY group first, followed by the full-service clients. To see which firms got the highest scores in last year's investor survey,
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Its rankings included a disclosure that they are "based on numerical scores, and not necessarily on statistical significance." Where applicable, the below rankings include the firms' score last year in the JD Power investor survey and the difference between the two years.
